Jun 21, 2023Home Ally

Types of Mortgages Available in the Indian Real Estate Market

by Godrej Properties Limited



Introduction to Types of Mortgages

1. Home Purchase Loans

Home purchase loans are the most common type of mortgage in India. These loans are specifically designed for individuals looking to purchase residential properties. Home purchase loans can be used for buying apartments, villas, or plots of land for residential construction. 

2. Loan Against Property (LAP)

Loan Against Property, also known as mortgage loans, allows borrowers to leverage the value of their owned property to secure a loan. These loans are typically taken for various purposes, such as business expansion, debt consolidation, funding higher education, or meeting personal financial needs. 

3. Construction Loans

Construction loans are specifically designed for borrowers who want to construct a new property on a plot of land. These loans provide financing to cover the construction costs in a phased manner. The loan amount is disbursed in stages, known as construction-linked disbursements, as the construction progresses. 

4. Balance Transfer Loans

Balance transfer loans enable borrowers to transfer their existing mortgage from one lender to another. The primary purpose of a balance transfer is to benefit from better interest rates, lower EMIs (Equated Monthly Instalments), or improved loan terms offered by the new lender. Borrowers often opt for balance transfer loans to reduce their interest burden or take advantage of promotional offers provided by other lenders.

5. Top-Up Loans

Top-up loans are an additional borrowing facility available to borrowers with an existing mortgage. These loans allow borrowers to obtain additional funds over and above their original loan amount. Top-up loans can be used for various purposes, such as home renovations, repairs, expansions, or meeting personal financial requirements. 

6. Reverse Mortgages

Reverse mortgages are specifically designed for senior citizens and retirees who own a property. Under this scheme, the lender provides regular cash flows to the borrower against the mortgage of their residential property. The borrower retains ownership of the property and receives periodic payments, which are usually tax free. 

7. Loan Against Rent Receivables

Loan against rent receivables is a specialised type of mortgage that allows borrowers to leverage the rental income generated from their property. The lender provides a loan amount based on the expected rental income over a specific period. 


The Indian real estate market offers a wide range of mortgage options to cater to the diverse needs of borrowers. Understanding the various types of mortgages available can help individuals make informed decisions based on their financial goals, property requirements, and repayment capacity. Borrowers must compare interest rates, loan terms, and eligibility criteria from different lenders to choose the most suitable mortgage option. 

Frequently Asked Questions

1. Can I avail of a construction loan for renovation purposes?

Ans: Construction loans are typically intended for borrowers constructing a new property on a plot of land. 

2. Can I prepay a loan against a property or a top-up loan?

Ans: Most lenders allow borrowers to prepay loans against property or top-up loans either partially or in full. 

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